Sales tax automation company Avalara sailed past Wall Street expectations to close out 2018, though its losses are growing as it continues to pile up new customers.
Revenue: Avalara posted $76.9 million in revenue in the fourth quarter, up 33 percent over a year ago and well ahead of analyst expectations of $70.14 million. For all of 2018, Avalara reported $272.1 million, a rise of 28 percent over the prior year, versus analyst expectations of $265.9 million.
Profits: Avalara’s net loss in the fourth quarter rose 25 percent from $9.8 million in 2017 to $12.3 million — or $0.19 per share — in 2018. Avalara’s losses were right at analyst expectations. Avalara reported a net loss of $44.5 million in 2018, up 16 percent from its 2017 losses of $38.2 million.
“We achieved strong fourth quarter and fiscal 2018 results, measured by revenue growth, an expanding customer base and broadening partner channel,” Scott McFarlane, Avalara co-founder and CEO, said in a statement. “Transaction tax compliance remains a highly manual process and is in the early stages of automating, representing an estimated $8 billion addressable market for us. This year we expanded our tax content, software platform, partner channel, and pre-built integrations, which we believe position Avalara as a clear choice to lead this automation cycle.”
Avalara stock is down 2 percent in after-hours trading. So far in 2019, Avalara stock is up 37 percent.
Avalara finished 2018 with 9,070 core customers, up 21 percent from the 7,490 it had at the end of 2017.
The company is forecasting good times ahead as its first quarter guidance is more ambitious than analysts expected. Avalara expects to bring in $78 million to $79 million in revenue, about $5 million more than analysts were anticipating. For all of 2019, Avalara expects to post revenue of $328 million to $332 million, which would be a rise of 20 to 22 percent over 2018.
A key U.S. Supreme Court decision in June concerning sales tax collection from online sales kept Avalara busy in the second half of the year. The court’s decision allows states to require retailers to collect sales taxes on goods sold to people inside their borders. In response, Avalara released a new service that helps retailers make sure they have the right licenses and registrations in states where they are now required to collect taxes.
“One of the numerous triggers that drives our customers to automate is changes in tax policy, and over the course of 2018 we began to increasingly benefit from tax policy changes in several states as they respond to the Supreme Court’s Wayfair decision,” McFarlane said. “These changes have raised awareness and increased the number of states where small and mid-sized businesses must remit sales taxes, which is driving a sense of urgency among many businesses. Avalara is well positioned to capitalize on these changes due to our industry leading offerings and strong partner network.”